Suppose the Incomes of Buyers in a Market for a Particular

question 89

Multiple Choice

Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices.What would we expect to occur in this market?

• A)Equilibrium price would decrease,but the impact on equilibrium quantity would be ambiguous.
• B)Equilibrium price would increase,but the impact on equilibrium quantity would be ambiguous.
• C)Equilibrium quantity would decrease,but the impact on equilibrium price would be ambiguous.
• D)Equilibrium quantity would increase,but the impact on equilibrium price would be ambiguous.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds; it is the price paid for the use of borrowed money, or, for corporations, the price paid for the use of borrowed capital.

Payout Ratio

A financial metric that measures the proportion of earnings a company pays to its shareholders in the form of dividends.

Net Income

Net income is the total profit of a company after all expenses and taxes have been deducted from total revenue.

Retained Earnings

Profits that a company keeps after dividends have been paid out, which may be used for investment or to pay off debt.